BUSINESS CREATION, EDUCATION AND EXPERIENCES AT UNED. Alfonso Herrero de Egaña Espinosa de los Monteros, UNED, Spain

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1 BUSINESS CREATION, EDUCATION AND EXPERIENCES AT UNED. Alfonso Herrero de Egaña Espinosa de los Monteros, UNED, Spain Co-author: Marta Solórzano García. UNED, Spain Summary Entrepreneurship courses are becoming part of the educational offer of universities of the United States and Europe, but this fact does not mean that currently the teaching of entrepreneurship is yet sufficiently integrated in higher education institutions' curricula (European Commission Final Report of the Expert Group 2008 ). There is nothing unusual about that if we consider that the study of entrepreneurship is still its infancy at university (Brazeal and Herbert 1999) or at least far from maturity (Robinson and Hayes, 1991). The expansion of entrepreneurship education is due to dissatisfaction with the traditional focus of business education on business administration (Solomon and Fernald, 1991). This paper starts differentiating entrepreneurship education from traditional business education. There is little consensus on just what exactly entrepreneurship students should be taught. In particular we analyze the different predominant methodologies in either area and compare them to the one used at UNED. For entrepreneurship educators, the challenge is to prepare entrepreneurship students to start their new ventures, but entrepreneurship courses, studies and programs should also provided the students with the possibility of starting their own business. 1. Introduction Entrepreneurship courses are becoming part of the educational offer of universities of the United States and Europe, but this fact does not mean that currently the teaching of entrepreneurship is yet sufficiently integrated in higher education institutions' curricula (European Commission Final Report of the Expert Group 2008 ). There is nothing unusual about that if we consider that the study of entrepreneurship is still its infancy at university (Brazeal and Herbert 1999) or at least far from maturity (Robinson and Hayes, 1991). The expansion of entrepreneurship education is due to dissatisfaction with the traditional focus of business education on business administration (Solomon and Fernald, 1991). This paper starts differentiating entrepreneurship education from traditional business education. There is little consensus on just what exactly entrepreneurship students should be taught. In particular we analyze the different predominant methodologies in either area and compare them to the one used at UNED. For entrepreneurship educators, the challenge is to prepare

2 entrepreneurship students to start their new ventures, but entrepreneurship courses, studies and programs should also provided the students with the possibility of starting their own business. 2. Differentiating Entrepreneurship Education from Traditional Business Education. Business schools are the paradigm of Business Education. A business school is a universitylevel institution that confers degrees in Business Administration. It teaches topics such as accounting, finance, information systems, marketing, organizational behavior, strategy, human resource management, and quantitative methods. Traditional business programs have come under increased criticism for failing to be relevant to the needs of today s changing business environment for four main reasons: They do not stress the cross-functional complexity of business problems. Business school courses are highly structured and do not often pose problems which require novel solutions(sexton and Bowman, 1984). The lack of creativity and individual thinking required (Solomon et al., 1994). They are not designed to promote creativity, innovation and self-employment (European Commission Final Report of the Expert Group 2008). Traditional business education is designed to meet the needs of well established firms and government institutions. The core management courses offered in traditional business programs is essential for success in any business career (Block and Stumpf, 1992); but fails in other areas, because there are fundamental differences between business principles applied to new ventures and those applied to large corporations (Davis et al., 1985) and also fails in the challenge to generate more quickly a greater variety of different ideas for how to exploit a business opportunity, and the ability to project a more extensive sequence of actions for entering business (Vesper and McMullan, 1988). As the field has been evolving entrepreneurial education, been seen as only about starting up business ventures, has included other questions such as (Solomon 2007): skill-building courses in negotiation, leadership, new product development, creative thinking and exposure to technological innovation. awareness of entrepreneurial career options. sources of venture capital. idea protection. the characteristics that define the entrepreneurial personality. challenges associated with each stage of venture development Entrepreneurship education programs exist most generally within established university business schools and should be considered as part of business education, but admitting that is a different field. Another reason is that the origins of entrepreneurship education are linked to Harvard Business School. In 1947 Myles Mace introduced and elective subject in the MBA titled The Management of New Enterprises, the course has remained, in various incarnations, a fixture of the HBS curriculum for decades and is regarded as the foundation of the School's extensive entrepreneurial management program (Katz 2003). According to our point of view the classification should be the following.

3 Business Administration Programs MBA and others Business Education Entrepreneurship Education Programs (Curran, J y Stanworth 1989) Education for Entrepreneurial Dinamism Education for starting up business ventures and selfemployment. Lifelong Learning Education for Entrepreneurs Sensibilisation Actions for Entrepreneurial Activity etcetera 3. Methodologies Traditional business education methodology in Europe and the United States. Some business schools center their teaching around the use of case studies (i.e. the case method). Business cases are historical descriptions of actual business situations. Typically, information is presented about a business firm's products, markets, competition, financial structure, sales volumes, management, employees and other factors affecting the firm's success. The length of a business case study may range from two or three pages to 30 pages, or more. Students are expected to scrutinize the case study and prepare to discuss strategies and tactics that the firm should employ in the future. Three different methods have been used in business case teaching: Prepared case-specific questions to be answered by the student. This is used with short cases intended for undergraduate students. The underlying concept is that such students need specific guidance to be able to analyze case studies. Problem-solving analysis. This second method, initiated by the Harvard Business School is by far the most widely used method in MBA and executive development programs. The underlying concept is that with enough practice (hundreds of case analyses) students develop intuitive skills for analyzing and resolving complex business situations. Successful implementation of this method depends heavily on the skills of the discussion leader. A generally applicable strategic planning approach. This third method does not require students to analyze hundreds of cases. A strategic planning model is provided and students are instructed to apply the steps of the model to six to a dozen cases during a semester. This is sufficient to develop their ability to analyze a complex situation, generate a variety of possible strategies and to select the best ones. In contrast to the case method some schools use a skills-based approach in teaching business. This approach emphasizes quantitative methods, in particular operations research, management information systems, statistics, organizational behavior, modeling and simulation, and decision science. The goal is to provide students a set of tools that will prepare them to tackle and solve problems. Another important approach used in business school is the use of Business Simulation Games that are used in different disciplines such as business, economics, management, etc.

4 There are also several business school that still rely on the lecture method to give students a basic business education. Lectures are generally given from the professor's point of view, and rarely require interaction from the students unless note-taking is required. Methodology used in Entrepreneurial Education United States An analysis of the data obtained in the National Entrepreneurship Survey (Solomon 2007) conducted by researchers at The George Washington University indicates that the most popular type of teaching method in entrepreneurship courses/curriculum offered by two- and four-year colleges and universities was Creation of Business Plans (44 percent very frequent), followed by Class Discussion (43 percent very frequent), and then by Guest Speakers (28 percent very frequent). Also, the data indicates that 60 percent of the instructors developed their own sets of readings and text materials. Source: Solomon, George (2007), An examination of entrepreneurship education in the United States, Journal of Small Business and Enterprise Development Vol. 14 No. 2, pp Europe According to the survey (Survey of Entrepreneurship in Higher Education. Main Report 2008), both the survey and the in-depth interviews conducted in this study show that teaching methods in use in Europe vary greatly among HEIs. Use of teaching methods in entreprneurship education in Europe Average interval (1-4) Often Sometimes Rarely Never Lecturing 1,38 75% 17% 8% 0% Case studies 1,45 61% 36% 3% 1% Entrepreneurs/practitioners in the classroom 1,62 45% 49% 4% 2% Project teams 1,54 58% 35% 5% 1% Company visits 2,16 17% 51% 28% 3% Venture simulation/mini companies 2,13 31% 39% 19% 11% Others 2,68 27% 16% 14% 43% (n = 186) Sourc e: European Commision (2008), Survey of Entrepreneurship in Higher Education. Main Report The most common teaching method in entrepreneurship is lecturing, but most of the HEIs also use case studies very often. The in-depth interviews show a clear need for the development of national and local case studies. Teaching entrepreneurship includes an element of practical learning, which may open up for the use of creative teaching methods. By presenting cases for the students, making use of

5 guest lecturers who have experience from the field and by making the students simulate or create own businesses, the entrepreneurship lecturers want to provide inspiration and give the necessary tools for starting a new business. In Spain the majority of entrepreneurship courses are offered in business and economic studies, around 55% of identified entrepreneurship courses take place within business and economic courses, compared to 21% in technology and 19% in social studies. A survey 1 identified 52 extracurricular programmes and initiatives of this type to add to 49 curricular teaching courses. Programmes are directed at any member of the university community with a business idea, although take-up is greatest among those who have completed their studies. An example of possible approaches and methods that can be used in teaching and disseminating entrepreneurship within higher education in Spain is The Enterprise Initiative Centre, with the backing of Fundación Caja Madrid, offers support for all stages of business start-up within the institutional framework of the Fundación General de la Universidad Autónoma de Madrid, from the birth of an idea through to the consolidation of the resulting business venture. The method followed is an integrated one based on informing, training, accompanying and advising university students and research staff. The programme has helped in creating 111 new companies (Survey of Entrepreneurship in Higher Education. Main Report 2008). Specific measures can be summarized as follows: Awareness-raising: action in the classrooms and research groups, aimed at spreading entrepreneurial values and identifying business opportunities. Training covering not so much business administration as such, but the specifics of the entrepreneurial process. Tutoring by experts and professionals from these sectors, with access to incubation services and specific network finance with the more significant regional entities. This service is used to assess the opportunity, the idea and the business model and to provide support to the entrepreneur in developing his or her business plan. Technical assistance in the process of company creation, everyday problems of business start-up, search for finance, premises, specialised staff, commercial and industrial partners, market development, internationalisation, and so on. The University Entrepreneur Prize offers special cash prizes to the best Human and Social Sciences project and to the best Social Entrepreneurship project. The School of Social Entrepreneurs, the aim of which is to provide a services platform to people promoting social initiatives in the geographical area of the University. Another programme (INNOVA) in Spain operates at the various steps of the entrepreneurial process: awareness-raising activities, including creativity workshops, extracurricular training actions; start-up assistance; location in enterprise hatcheries; financing. Since its creation, the INNOVA programme has helped in creating 197 technology based companies. UNED offer is limited to a program of technology based companies within the institutional framework of OTRI (UNED) and to the offer of an elective course in business creation that will allow the student to obtain academic credits. UNED is also involved in CBVE (Cross- Border Virtual Entrepreneurship) Project. CBVE is a collaborative action by an established European consortium to urgently address the entrepreneurial skills of the lifelong learner. The main objective of CBVE is to enhance the professional skills of students by lifelong open and flexible learning approaches, with a specific focus on the development, extension and expansion of entrepreneurial skills. The role of UNED within the Project is to is to generate a step-wise approach for coaching students in the development of their competence and enterprise planning. 1 Survey by the Ministry for Industry, Tourism and Trade, Directorate General for SME Policy, /EstudioIniciativasEmprendedoras.pdf

6 The methodology used in the course is the creation of a business plan. The course is divided in three phases. In Phase I, students must review the materials of the Master Class, also they must present the business idea that will be evaluated and criticized by the teachers of the course. The student ability o capability as entrepreneur will be evaluated through a test. The teacher will evaluate the business idea, the student s entrepreneur capability and will provide a feedback to student. In Phase II, the student/entrepreneur will receive the results of the test of Phase I. The results of the test are comments about the business idea and about the student capability as entrepreneur. Having in mind the results of Phase I, the student can start the Business Plan. During this phase the student can seek advice from the teacher, or from experts and professionals from a particular sector. Once the business plan is finished the teachers will evaluate the plan. The teacher will accept it or reject it. Phase III, begins when the student receives the report from the teacher. Having in mind the guidelines stated by the teacher he will present a new plan or will modify former plan. Once the business plan is accepted, the student could use Business Simulation Games to test it. To complete the Business Plan will communicate the results of the simulation in a final report. We have chosen the methodology of Creation of Business Plans, because of our experience with former editions of the course of business creation. Another reason is that if entrepreneurship education is to produce entrepreneurial founders, the challenge to educators will be to craft courses, programs and major fields of study that meet the rigors of academia while keeping a reality-based focus and entrepreneurial climate in the learning experience environment. Keeping the reality-based focus and the entrepreneurial climate could be assured by our approach to the business plan, the similarity between the steps of the scientific method and the steps of our course can help to meet the rigors of academia.

7 4. Concluding Remarks Creation of Business Plans is the most popular type of teaching method in entrepreneurship courses/curriculum offered by two- and four-year colleges and universities in the United States. According to the survey requested by the European Commission, lecturer is the most common teaching method in entrepreneurship in Europe, followed by the use of case study. The teaching methods that are being used in Europe, based in the information provided by the survey requested by the Commission, coincide partially with the methodology that is being used by the traditional business education programs and universities.

8 Creation of Business Plans methodology does not assure by itself the active-applied and active-experimentation learning style required by the entrepreneurial education. The approach of the course to the business plan is the key to the achievement of this goal. In the case of a business creation course the course should lead to the creation of new companies. This objective has been fulfilled in some cases, with backing of financial institutions within the institutional framework of foundations or universities. In absence of this support, the teachers should help the students to use the different programs for start-ups offered by the public administrations. Distance education courses in business creation are possible. Furthermore than the experiences of some distance education universities, some literature review of distant learning and course performance acts also a guarantor for the feasibility of this kind of studies (Kotey and Anderson, 2006). Sooner (1999), Gubernick and Ebeling (1997) found that distance-learning students out-perform internal students, Pool (1996) have studied the relation between course performance and distance learning; Didia and Hasnat (1998) found a positive association between age and student performance and argued that maturity is beneficial to the learning process; Adams and Hancock (2000) established that the amount of work experience was a better predictor of successful performance in an MBA program than GMAT score or undergraduate grade point average. Of course within the literature there are evidences on the contrary. Given these conflicting results, the only thing that we can say is that there is no conclusive evidence that distance education approach to entrepreneurial education is wrong or unfeasible. The growth in popularity of distance learning courses is indisputable (Cheung and Kan, 2002). Why is not possible to teach entrepreneurship in a distance learning environment when virtual practices are a reality? If it is possible to travel virtually with your body why it should be impossible to travel with your mind? References Adams, A.J. and Hancock, T. (2000), Work experience as a predictor of MBA performance, College Student Journal, Vol. 34 No. 2, p Block, Z. and Stumpf, S.A. (1992), Entrepreneurship education research: experience and challenge, in Sexton, D.L. and Kasarda, J.D. (Eds), The State of the Art of Entrepreneurship, PWS-Kent Publishing, Boston, MA, pp Brazeal D. and Herbert T.T. (1999), The Genesis of Entrepreneurship, Entrepreneurship, Theory and Practice, Vol 23 No 3, pp Cheung, L. and Kan, A.C. (2002), Evaluation of factors related to student performance in a distance-learning communication course, Journal of Education for Business, Vol. 77 No. 5, pp Curran, J y Stanworth (1989), Education and Training for Enterprise: Some Problems for Classiffication, Evaluation, Policy and Research, International Small Business Journal, 7, 2, Davis, C., Hills, G.E. and LaForge, R.W. (1985), The marketing/small enterprise paradox: a research agenda, International Small Business Journal, Vol. 3, pp Didia, D. and Hasnat, B. (1998), The determinants of performance in the university introductory finance course, Financial Practice and Education, Vol. 8 No. 1, pp European Commission 2008, Best Procedure Project: Entrepreneurship in Higher Education, Especially in Non-Business Studies Final Report of the Expert Group, pag 7. European Commision (2008), Survey of Entrepreneurship in Higher Education. Main Report Gubernick, L. and Ebeling, A. (1997), I got my degree by , Forbes, Vol. 159 No. 12, pp Katz, J.A., (2003), The Chronology and Intellectual Trajectory of American Entrepreneurship Education: , Journal of Business Venturing, 18,

9 Kotey, B and Anderson, P, (2006), Performance of distance learning students in a small business management course, Education&Training, Vol. 48 No. 8/9, pp Pool, P. (1996), Teaching via interactive television: an examination of teaching and student satisfaction, Journal of Education for Business, Vol. 71 No. 2, pp Robinson, P. and Hayes, M. (1991), Entrepreneurship education in America s major universities, Entrepreneurship Theory and Practice, Vol. 15 No. 3, pp Sexton, D.L. and Bowman, N.B. (1984), Entrepreneurship education: suggestions for increasing effectiveness, Journal of Small Business Management, Vol. 22 No. 4, pp Solomon, G.T. and Fernald, L.W. Jr (1991), Trends in small business management and entrepreneurship education in the United States, Entrepreneurship Theory and Practice, Vol. 15 No. 3, pp Solomon, G.T., Weaver, K.M. and Fernald, L.W. Jr (1994), Pedagogical methods of teaching entrepreneurship: an historical perspective, Gaming and Simulation, Vol. 25 No. 3, pp Solomon, George (2007), An examination of entrepreneurship education in the United States, Journal of Small Business and Enterprise Development Vol. 14 No. 2, pp Sooner, B.S. (1999), Success in the capstone business course: assessing the effectiveness of distance learning, Journal of Education for Business, Vol. 74 No. 1, pp Vesper, K.H. and McMullan, W.E. (1988), Entrepreneurship: today courses, tomorrow degrees?, Entrepreneurship Theory and Practice, Vol. 13 No. 1, pp